RLJ Lodging Trust Reports First Quarter 2019 Results

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BETHESDA, Md.–(BUSINESS WIRE)–RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the three months ended March 31, 2019.

Highlights

  • Pro forma RevPAR increased 1.3%, driven by a Pro forma ADR increase of 2.0%
  • Net income of $28.3 million
  • Pro forma Consolidated Hotel EBITDA of $120.5 million, an increase of 0.6% over the prior year
  • Pro forma Hotel EBITDA Margin of 30.2%
  • Adjusted FFO of $82.6 million, an increase of 1.4% over the prior year
  • Repurchased 0.6 million common shares since the beginning of the year for $10.8 million at an average price of $17.53
  • Refinanced approximately $381 million of debt subsequent to quarter-end, reducing interest rates, extending maturities, and adding flexibility

“We are pleased with our solid performance this quarter, which underscores the targeted capital investments we made last year in markets and assets that are positioned for outsized growth in 2019 and beyond. Our asset management team successfully implemented cost containment initiatives to mitigate the significant cost pressures that we are seeing, which aided in our ability to outperform our bottom line expectations,” commented Leslie D. Hale, President and Chief Executive Officer. “In addition to achieving solid results, we prudently allocated capital through highly accretive share repurchases, further strengthened our balance sheet, and made progress on our strategic initiative to sell our non-core hotels. All of these initiatives have positioned RLJ to achieve our key 2019 strategic priorities.”

The prefix “Pro forma”, as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude any hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. Explanations of EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release.

Pro forma RevPAR growth for the first quarter was 1.3%. The Company’s top performing markets were Atlanta, Northern California, and Louisville with Pro forma RevPAR growth of 20.9%, 15.5%, and 13.5%, respectively. The Company’s RevPAR growth was impacted by approximately 25 basis points from the government shutdown and 60 basis points from current year renovation disruption. Additionally, excluding Denver, which experienced softness in the quarter, Pro forma RevPAR growth was 1.8%.

Adjusted EBITDA for the first quarter was $111.5 million, a decrease of $4.2 million from the comparable period in 2018. Adjusted EBITDA for the comparable period in the prior year included $4.8 million from seven sold hotels. Normalizing for the impact of asset sales, Adjusted EBITDA would have increased by $0.6 million from the comparable period in 2018.

Interest expense for the first quarter was $20.1 million, a decrease of $8.6 million from the comparable period in 2018, primarily due to the prior year redemption of the senior secured notes and the repayment of the Knickerbocker mortgage. First quarter interest expense includes a unrealized gain of $2.3 million related to interest rate hedges that were specifically assigned to debt that was repaid in 2019. Please refer to the financial tables for a reconciliation of net interest expense.

Financial and Operating Highlights

($ in thousands, except ADR, RevPAR, and per share amounts)

(unaudited)

   
 

For the three months ended March 31,

2019   2018   Change
Operational Overview:
Pro forma ADR $175.32 $171.87 2.0%
Pro forma Occupancy 74.8% 75.3% (0.7)%
Pro forma RevPAR $131.19 $129.51 1.3%
 
Financial Overview:
Total Revenues $399,267 $429,593 (7.1)%
Pro forma Revenue $398,849 $390,499 2.1%
 
Net Income $28,331 $23,894 18.6%
 
Pro forma Hotel EBITDA $120,473 $119,761 0.6%
Pro forma Hotel EBITDA Margin

30.2%

30.7% -46 bps
Adjusted EBITDA (1) $111,546 $115,793 (3.7)%
 
Adjusted FFO $82,639 $81,470 1.4%
Adjusted FFO Per Diluted Common Share and Unit $0.48 $0.47 2.1%

Note:

(1)

  For the three months ended March 31, 2018, the seven sold hotels in 2018 contributed $4.8 million to Adjusted EBITDA
 

Share Repurchases

Year-to-date, the Company has repurchased 0.6 million shares of its common stock for $10.8 million at an average price per share of $17.53. The Company’s share buyback program has remaining capacity of $249.6 million.

Balance Sheet

As of March 31, 2019, the Company had $241.5 million of unrestricted cash on its balance sheet, $460.0 million available on its revolving credit facility, and $2.2 billion of debt outstanding.

The Company’s ratio of net debt to Adjusted EBITDA for the trailing twelve-month period ended March 31, 2019, was 3.8x.

Dividends

The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the first quarter. The dividend was paid on April 15, 2019, to shareholders of record as of March 29, 2019.

The Company’s Board of Trustees declared a preferred dividend of $0.4875 on its Series A cumulative convertible preferred shares. The dividend was paid on April 30, 2019, to shareholders of record as of March 29, 2019.

Subsequent Events

In April 2019, the Company refinanced approximately $381 million of secured debt, which reduced borrowing costs, extended maturities (including extensions), and improved non-financial terms. These included the following:

  • New $200.0 million five-year floating rate mortgage loan maturing April 2024
  • New $96.0 million seven-year floating rate mortgage loan maturing April 2026
  • Amended and restated $85.0 million seven-year floating rate mortgage loan maturing April 2026

The Company utilized proceeds from the two new loans to repay its $150.0 million secured loan maturing in October 2021 and approximately $140 million secured loan maturing in March 2022.

Outlook

The Company’s full-year outlook includes all hotels owned as of May 8, 2019. Potential future acquisitions, dispositions, financing, or share repurchases are not incorporated into the Company’s outlook below and could result in a material change to the Company’s outlook. For the full year 2019, the Company is updating its outlook to incorporate first quarter results.

    Outlook as of February 28, 2019   Current Outlook   Variance at Midpoint
Pro forma RevPAR growth 0.0% to +2.0% 0.0% to +2.0%
Pro forma Hotel EBITDA Margin 31.6% to 32.6% 31.8% to 32.6% 10 bps
Pro forma Consolidated Hotel EBITDA $522.0M to $552.0M $527.0M to $552.0M $2.5M
Corporate Cash General & Administrative $35.0M to $36.0M $35.0M to $36.0M
Adjusted EBITDA $487.0M to $517.0M $492.0M to $517.0M $2.5M
Adjusted FFO per Diluted Share and Unit $2.15 to $2.30 $2.18 to $2.30 $0.015

Additionally, key assumptions underlying the Company’s full year 2019 outlook include:

  • Net interest expense of $88 million to $90 million, which excludes the impact of unrealized gains or losses related to interest rate hedges
  • Capital expenditures related to renovations in the range of $90 million to $110 million and approximately 40 bps to 50 bps of renovation related RevPAR disruption
  • Cash income tax expense of $3 million to $4 million
  • Diluted weighted-average common shares and units of 173.7 million, assuming no additional share repurchases

For the second quarter 2019, the Company anticipates Pro forma Consolidated Hotel EBITDA and Adjusted EBITDA to be between 28.75% and 29.75% of the Company’s full year 2019 outlook, calculated at the midpoint of the respective outlook range.

Earnings Call

The Company will conduct its quarterly analyst and investor conference call on May 9, 2019, at 10:00 a.m. (Eastern Time). The conference call can be accessed by dialing (877) 407-3982 or (201) 493-6780 for international participants and requesting RLJ Lodging Trust’s first quarter earnings conference call. Additionally, a live webcast of the conference call will be available through the Company’s website at http://www.rljlodgingtrust.com. A replay of the conference call webcast will be archived and available online through the Investor Relations page of the Company’s website.

About Us

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company’s portfolio consists of 150 hotels with approximately 28,600 rooms located in 25 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.

Forward Looking Statements

The following information contains certain statements, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally are identified by the use of the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “plan,” “may,” “will,” “will continue,” “intend,” “should,” or similar expressions. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs, and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and the Company’s actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the current global economic uncertainty, increased direct competition, changes in government regulations or accounting rules, changes in local, national, and global real estate conditions, declines in the lodging industry, seasonality of the lodging industry, risks related to natural disasters, such as earthquakes and hurricanes, hostilities, including future terrorist attacks or fear of hostilities that affect travel, the Company’s ability to obtain lines of credit or permanent financing on satisfactory terms, changes in interest rates, access to capital through offerings of the Company’s common and preferred shares of beneficial interest, or debt, the Company’s ability to identify suitable acquisitions, the Company’s ability to close on identified acquisitions and integrate those businesses, and inaccuracies of the Company’s accounting estimates. Given these uncertainties, undue reliance should not be placed on such statements. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. The Company cautions investors not to place undue reliance on these forward-looking statements and urges investors to carefully review the disclosures the Company makes concerning risks and uncertainties in the sections entitled “Risk Factors,” “Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report, as well as risks, uncertainties, and other factors discussed in other documents filed by the Company with the Securities and Exchange Commission.

RLJ Lodging Trust
Non-GAAP and Accounting Commentary

Non-Generally Accepted Accounting Principles (“Non-GAAP”) Financial Measures

The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre, (5) Adjusted EBITDA, (6) Hotel EBITDA, and (7) Hotel EBITDA Margin. These Non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of its operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, and Hotel EBITDA Margin as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company.

Funds From Operations (“FFO”)

The Company calculates Funds from Operations (“FFO”) in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company believes that the presentation of FFO provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between real estate investment trusts (“REITs”), even though FFO does not represent an amount that accrues directly to common shareholders.

The Company’s calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing the Company to non-REITs. The Company presents FFO attributable to common shareholders, which includes unitholders of limited partnership interest (“OP units”) in RLJ Lodging Trust, L.P., the Company’s operating partnership, because the OP units are redeemable for common shares of the Company. The Company believes it is meaningful for the investor to understand FFO attributable to all common shares and OP units.

EBITDA and EBITDAre

Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) is defined as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sales of assets; and (3) depreciation and amortization. The Company considers EBITDA useful to an investor in evaluating and facilitating comparisons of its operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions.

In addition to EBITDA, the Company presents EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss (calculated in accordance with GAAP) excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated partnerships and joint ventures. The Company believes that the presentation of EBITDAre provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between REITs.

Adjustments to FFO and EBITDAre

The Company adjusts FFO, EBITDA, and EBITDAre for certain items that the Company considers either outside the normal course of operations or extraordinary. The Company believes that Adjusted FFO, Adjusted EBITDA, and Adjusted EBITDAre provide useful supplemental information to investors regarding its ongoing operating performance that, when considered with net income or loss, FFO, EBITDA, and EBITDAre, are beneficial to an investor’s understanding of its operating performance. The Company adjusts FFO, EBITDA, and EBITDAre for the following items:

  • Transaction Costs: The Company excludes transaction costs expensed during the period.
  • Non-Cash Expenses: The Company excludes the effect of certain non-cash items such as the amortization of share-based compensation and non-cash income taxes.
  • Other Non-Operational Expenses: The Company excludes the effect of certain non-operational expenses representing income and expenses outside of the normal course of operations

The Company previously presented Adjusted EBITDA with adjustments for noncontrolling interests in consolidated joint ventures. The rationale for including 100% of Adjusted EBITDA for consolidated joint ventures with noncontrolling interests is that the full amount of any debt of these consolidated joint ventures is reported in our consolidated balance sheet and metrics using debt to EBITDA provide a better understanding of the Company’s leverage. This is also consistent with NAREIT’s definition of EBITDAre.

Hotel EBITDA and Hotel EBITDA Margin

With respect to Consolidated Hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses and certain non-cash items provides a more complete understanding of the operating results over which individual hotels and operators have direct control. The Company believes property-level results provide investors with supplemental information about the ongoing operational performance of the Company’s hotels and the effectiveness of its third-party management companies.

Pro forma Consolidated Hotel EBITDA includes prior ownership information provided by the sellers of the hotels for periods prior to our acquisition of the hotels, which has not been audited and excludes results from sold hotels as applicable. Pro forma Hotel EBITDA and Pro forma Hotel EBITDA Margin exclude the results of any non-comparable hotels that were under renovation or not open for the entirety of the comparable periods. The following is a summary of pro forma hotel adjustments:

Pro forma adjustments: Acquired hotels

For the three months ended March 31, 2019 and 2018, respectively, no hotels were acquired.

Pro forma adjustments: Sold hotels

For the three months ended March 31, 2019, no hotels were sold. For the three months ended March 31, 2018, pro forma adjustments included the following hotels:

  • Embassy Suites Boston – Marlborough sold in February 2018
  • Sheraton Philadelphia Society Hill Hotel sold in March 2018
  • Embassy Suites Napa Valley sold in July 2018
  • DoubleTree Columbia sold in August 2018
  • The Vinoy Renaissance St. Petersburg Resort & Golf Club sold in August 2018
  • DoubleTree by Hilton Burlington Vermont sold in September 2018
  • Holiday Inn San Francisco – Fisherman’s Wharf sold in October 2018

RLJ Lodging Trust

Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

(unaudited)

    March 31,
2019
 

December 31,
2018

Assets
Investment in hotel properties, net $   5,355,545 $ 5,378,651
Investment in unconsolidated joint ventures 21,952 22,279
Cash and cash equivalents 241,481 320,147
Restricted cash reserves 54,217 64,695
Hotel and other receivables, net of allowance of $353 and $598, respectively 67,605 52,115
Lease right-of-use assets 149,492
Deferred income tax asset, net 46,114 47,395
Intangible assets, net 5,143 52,448
Prepaid expense and other assets     58,981     67,367  
Total assets $   6,000,530   $ 6,005,097  
Liabilities and Equity
Debt, net $ 2,200,146 $ 2,202,676
Accounts payable and other liabilities 169,398 203,833
Deferred income tax liability 2,766 2,766
Advance deposits and deferred revenue 30,133 25,411
Lease liabilities 124,146
Accrued interest 15,124 7,913
Distributions payable     65,595     65,557  
Total liabilities 2,607,308 2,508,156
Equity
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized
Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2019 and December 31, 2018 366,936 366,936
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 173,667,027 and 174,019,616 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively 1,737 1,740
Additional paid-in capital 3,187,285 3,195,381
Accumulated other comprehensive (loss) income (191 ) 16,195
Distributions in excess of net earnings     (187,092 )   (150,476 )
Total shareholders’ equity 3,368,675 3,429,776
Noncontrolling interest:
Noncontrolling interest in consolidated joint ventures 13,861 11,908
Noncontrolling interest in the Operating Partnership     10,686     10,827  
Total noncontrolling interest     24,547     22,735  
Preferred equity in a consolidated joint venture, liquidation value of $45,544 at December 31, 2018         44,430  
Total equity     3,393,222     3,496,941  
Total liabilities and equity $   6,000,530   $ 6,005,097  

Note:

The corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.
 

RLJ Lodging Trust

Consolidated Statements of Operations

(Amounts in thousands, except share and per share data)

(unaudited)

    For the three months ended March 31,
2019   2018
Revenues
Operating revenues
Room revenue $ 337,670 $ 357,645
Food and beverage revenue 44,246 52,195
Other revenue 17,351   19,753  
Total revenues $ 399,267   $ 429,593  
Expenses
Operating expenses
Room expense $ 84,188 $ 89,969
Food and beverage expense 34,209 41,263
Management and franchise fee expense 34,118 35,676
Other operating expense 97,118   106,123  
Total property operating expenses 249,633 273,031
Depreciation and amortization 58,403 61,408
Property tax, insurance and other 30,597 34,499
General and administrative 11,160 10,913
Transaction costs 559   1,672  
Total operating expenses 350,352   381,523  
Other income 274 1,093
Interest income 1,171 1,230
Interest expense (20,062 ) (28,701 )
Loss on sale of hotel properties, net (3,734 )
Gain on extinguishment of indebtedness, net   7,659  
Income before equity in loss from unconsolidated joint ventures 30,298 25,617
Equity in loss from unconsolidated joint ventures (381 ) (381 )
Income before income tax expense 29,917 25,236
Income tax expense (1,586 ) (1,342 )
Net income 28,331 23,894
Net loss (income) attributable to noncontrolling interests:
Noncontrolling interest in consolidated joint ventures 353 234
Noncontrolling interest in the Operating Partnership (92 ) (73 )
Preferred distributions – consolidated joint venture (186 ) (366 )
Redemption of preferred equity – consolidated joint venture (1,153 )  
Net income attributable to RLJ 27,253 23,689
Preferred dividends (6,279 ) (6,279 )
Net income attributable to common shareholders $ 20,974   $ 17,410  
Basic per common share data:
Net income per share attributable to common shareholders $ 0.12   $ 0.10  
Weighted-average number of common shares 172,796,998   174,193,671  
Diluted per common share data:
Net income per share attributable to common shareholders $ 0.12   $ 0.10  
Weighted-average number of common shares 172,856,230   174,268,815  

Note:

The Statements of Comprehensive Income and corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.

 

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands, except per share data)

(unaudited)

 

Funds from Operations (FFO) Attributable to Common Shareholders and Unitholders

    For the three months ended March 31,
2019       2018
Net income $ 28,331 $ 23,894
Preferred dividends (6,279 ) (6,279 )
Preferred distributions – consolidated joint venture (186 ) (366 )
Redemption of preferred equity – consolidated joint venture (1,153 )
Depreciation and amortization 58,403 61,408
Loss on sale of hotel properties, net 3,734
Noncontrolling interest in consolidated joint ventures 353 234
Adjustments related to consolidated joint ventures (1) (74 ) (75 )
Adjustments related to unconsolidated joint ventures (2) 694   668  
FFO 80,089 83,218
Transaction costs 559 1,672
Gain on extinguishment of indebtedness, net (7,659 )
Amortization of share-based compensation 2,725 2,514
Non-cash income tax expense 1,281 1,103
Other (income) expenses (3) (2,015 ) 622  
Adjusted FFO $ 82,639   $ 81,470  
 
Adjusted FFO per common share and unit-basic $ 0.48 $ 0.47
Adjusted FFO per common share and unit-diluted $ 0.48 $ 0.47
 
Basic weighted-average common shares and units outstanding (4) 173,570 174,968
Diluted weighted-average common shares and units outstanding (4) 173,629 175,043

Note:

(1)   Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint ventures.
(2) Includes our ownership interest of the depreciation and amortization expense of the unconsolidated joint ventures.
(3) Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, activist shareholder costs, and an unrealized gain on certain discontinued cash flow hedges.
(4) Includes 0.8 million weighted-average operating partnership units for the three month periods ended March 31, 2019 and 2018, respectively.
 

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

 

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

    For the three months ended March 31,
2019       2018
Net income $ 28,331 $ 23,894
Depreciation and amortization 58,403 61,408
Interest expense, net of interest income (1) 18,891 27,471
Income tax expense 1,586 1,342
Adjustments related to unconsolidated joint ventures (2) 817   795  
EBITDA 108,028 114,910
Loss on sale of hotel properties, net   3,734  
EBITDAre 108,028 118,644
Transaction costs 559 1,672
Gain on extinguishment of indebtedness, net (7,659 )
Amortization of share-based compensation 2,725 2,514
Other expenses, net (3) 234   622  
Adjusted EBITDA 111,546 115,793
General and administrative (4) 8,426 8,294
Other corporate adjustments (5) 501   486  
Consolidated Hotel EBITDA 120,473   124,573  
Pro forma adjustments – income from sold hotels   (4,812 )
Pro forma Consolidated Hotel EBITDA 120,473   119,761  
Pro forma adjustments – income from non-comparable hotels    
Pro forma Hotel EBITDA $ 120,473   $ 119,761  

Note:

(1)   Includes an unrealized gain of $2.3 million on certain discontinued cash flow hedges related to mortgage debt that was repaid in 2019 for the three months ended March 31, 2019.
(2) Includes our ownership interest of the interest, depreciation, and amortization expense of the unconsolidated joint ventures.
(3) Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, and activist shareholder costs.
(4) Excludes amortization of share-based compensation reflected in Adjusted EBITDA.
(5) Other corporate adjustments include property-level adjustments and certain revenues and expenses at corporate entities. These items include interest income, amortization of deferred management fees, key money amortization, ground rent amortization, legal fees, revenues and expenses associated with non-hotel properties, income (loss) from unconsolidated entities, internal lease rent expense, and other items.
 

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

 

Pro forma Hotel EBITDA Margin

    For the three months ended March 31,
2019       2018
Total revenue $ 399,267 $ 429,593
Pro forma adjustments – revenue from sold hotels (38,682)
Other corporate adjustments / non-hotel revenue (418) (412)
Pro forma Hotel Revenue $ 398,849 $ 390,499
 
Pro forma Hotel EBITDA $ 120,473 $ 119,761
 
Pro forma Hotel EBITDA Margin 30.2% 30.7%

RLJ Lodging Trust

Consolidated Debt Summary

(Amounts in thousands)

(unaudited)

Loan     Base Term (Years)   Maturity
(incl. extensions)
  Floating / Fixed   Interest Rate (1)     Balance as of
March 31, 2019 (2)
    Balance as of April 30, 2019
Secured Debt    
Mortgage loan – 4 hotels 3 Oct 2021 Floating (3) 4.09% $ 150,000 $
Mortgage loan – 1 hotel 10 Jun 2022 Fixed 5.25% 31,255 31,198
Mortgage loan – 2 hotels 10 Oct 2022 Fixed 4.95% 56,756 56,651
Mortgage loan – 1 hotel 10 Oct 2022 Fixed 4.95% 32,623 32,563
Mortgage loan – 1 hotel 10 Oct 2022 Fixed 4.94% 28,819 28,766
Mortgage loan – 5 hotels 5 Mar 2023 Floating 4.59% 85,000
Mortgage loan – 7 hotels 3 Apr 2024 Floating (3)(6) L + 152 bps 200,000
Mortgage loan – 3 hotels 5 Apr 2026 Floating (3)(5)(6) L + 160 bps 96,000
Mortgage loan – 4 hotels 5 Apr 2026 Floating (6) L + 160 bps   85,000
Weighted-Average / Secured Total 4.56% $ 384,453 $ 530,178
 
Unsecured Debt
Revolver (4) 4 Apr 2021 Floating 3.99% $ 140,000 $
$400 Million Term Loan Maturing 2021 5 Apr 2021 Floating (3)(5) 3.11% 400,000 400,000
$150 Million Term Loan Maturing 2022 7 Jan 2022 Floating (3) 3.08% 150,000 150,000
$400 Million Term Loan Maturing 2023 5 Jan 2023 Floating (3) 3.78% 400,000 400,000
$225 Million Term Loan Maturing 2023 5 Jan 2023 Floating (3) 3.78% 225,000 225,000
Senior Unsecured Notes 10 Jun 2025 Fixed 6.00% 475,000     475,000
Weighted-Average / Unsecured Total 4.18% $ 1,790,000 $ 1,650,000
       
Weighted-Average / Gross Debt 4.24% $ 2,174,453     $ 2,180,178

Note:

(1)   Interest rates as of March 31, 2019.
(2) Excludes the impact of fair value adjustments and deferred financing costs.
(3) The floating interest rate is hedged with an interest rate swap.
(4) As of March 31, 2019, there was $460.0 million of borrowing capacity on the revolver, which is charged an unused commitment fee of 0.30% annually.
(5) Reflects an interest rate swap of $93.0 million on the $96.0 million mortgage loan and $350.0 million on the $400.0 million term loan.
(6) Reflects financing transactions in April 2019.
 

Schedule of Net Interest Expense

(Amounts in thousands)

(unaudited)

    For the three months ended March 31,
2019     2018
Senior Notes $ 5,944 $ 10,587
Revolver and Term Loans 10,153 10,578
Mortgage loans 5,423 6,607
Amortization of deferred financing costs 792   929  

Sub-total

$ 22,312 $ 28,701
Less: Unrealized gain on discontinued cash flow hedges (1) (2,250 )  
Interest Expense $ 20,062 $ 28,701
Less: Interest income (1,171 ) (1,230 )
Net Interest Expense $ 18,891   $ 27,471  

Note:

(1)   The unrealized gain on discontinued cash flow hedges is excluded from the calculations of Adjusted FFO and Adjusted EBITDA.
 

RLJ Lodging Trust

Pro forma Operating Statistics – Top 60 Assets

(unaudited)

Property   City/State   # of Rooms  

Pro forma Consolidated
Hotel EBITDA

The Knickerbocker New York   New York, NY   330   $13,004
Marriott Louisville Downtown Louisville, KY 616 11,569
Wyndham San Diego Bayside San Diego, CA 600 10,580
San Francisco Marriott Union Square San Francisco, CA 401 9,794
Wyndham Boston Beacon Hill Boston, MA 304 9,403
The Mills House Wyndham Grand Hotel Charleston, SC 216 9,100
Embassy Suites San Francisco Airport – Waterfront Burlingame, CA 340 8,620
Courtyard Austin Downtown Convention Center Austin, TX 270 8,417
Embassy Suites Fort Lauderdale 17th Street Fort Lauderdale, FL 361 8,099
Embassy Suites Los Angeles – International Airport South El Segundo, CA 349 7,948
Hilton Myrtle Beach Resort Myrtle Beach, SC 385 7,869
Wyndham New Orleans – French Quarter New Orleans, LA 374 7,842
Embassy Suites Mandalay Beach – Hotel & Resort Oxnard, CA 250 7,650
Courtyard Portland City Center Portland, OR 256 7,577
Embassy Suites San Francisco Airport – South San Francisco South San Francisco, CA 312 7,573
DoubleTree Grand Key Resort Key West, FL 216 7,549
Courtyard San Francisco San Francisco, CA 166 7,424
DoubleTree Metropolitan Hotel New York City New York, NY 764 7,290
Residence Inn Palo Alto Los Altos Los Altos, CA 156 7,288
Embassy Suites Myrtle Beach – Oceanfront Resort Myrtle Beach, SC 255 7,202
Renaissance Pittsburgh Hotel Pittsburgh, PA 300 6,834
Hilton Garden Inn San Francisco Oakland Bay Brg Emeryville, CA 278 6,777
Embassy Suites Deerfield Beach – Resort & Spa Deerfield Beach, FL 244 6,454
Hyatt House Emeryville San Francisco Bay Area Emeryville, CA 234 6,398
Wyndham Santa Monica At the Pier Santa Monica, CA 132 6,365
Courtyard Waikiki Beach Honolulu, HI 403 6,350
Fairfield Inn & Suites Washington DC Downtown Washington, DC 198 6,132
Wyndham Philadelphia Historic District Philadelphia, PA 364 6,102
Hyatt House San Jose Silicon Valley San Jose, CA 164 6,078
Hyatt House Santa Clara Santa Clara, CA 150 6,008
Courtyard Chicago Downtown Magnificent Mile Chicago, IL 306 5,925
Embassy Suites Atlanta – Buckhead Atlanta, GA 316 5,848
Embassy Suites Tampa Downtown Convention Center Tampa, FL 360 5,706
Wyndham Houston – Medical Center Hotel & Suites Houston, TX 287 5,583
Courtyard Charleston Historic District Charleston, SC 176 5,404
Marriott Denver South @ Park Meadows Lone Tree, CO 279 5,356
DoubleTree Suites by Hilton Austin Austin, TX 188 5,270
Embassy Suites Milpitas Silicon Valley Milpitas, CA 266 5,231
Embassy Suites Boston Waltham Waltham, MA 275 5,226
Residence Inn Bethesda Downtown Bethesda, MD 188 5,089
Renaissance Fort Lauderdale Plantation Hotel Plantation, FL 250 5,063
Hyatt House San Diego Sorrento Mesa San Diego, CA 193 5,037
Residence Inn Austin Downtown Convention Center Austin, TX 179 4,987
Hilton Cabana Miami Beach Miami Beach, FL 231 4,963
Embassy Suites Orlando – International Drive South/Convention Center Orlando, FL 244 4,655
Embassy Suites Irvine Orange County Irvine, CA 293 4,554
Homewood Suites Washington DC Downtown Washington, DC 175 4,501
Hilton Garden Inn Los Angeles Hollywood Los Angeles, CA 160 4,472
Hyatt Place Washington DC Downtown K Street Washington, DC 164 4,208
Embassy Suites Dallas – Love Field Dallas, TX 248 4,149
Renaissance Boulder Flatiron Hotel Broomfield, CO 232 4,041
Embassy Suites Los Angeles Downey Downey, CA 220 3,994
Embassy Suites Miami – International Airport Miami, FL 318 3,879
Hyatt Place Fremont Silicon Valley Fremont, CA 151 3,865
Marriott Denver Airport @ Gateway Park Aurora, CO 238 3,782
Wyndham Pittsburgh University Center Pittsburgh, PA 251 3,747
Embassy Suites Phoenix – Biltmore Phoenix, AZ 232 3,679
Residence Inn National Harbor Washington DC Oxon Hill, MD 162 3,672
Embassy Suites Minneapolis – Airport Bloomington, MN 310 3,560
Hilton Garden Inn New Orleans Convention Center New Orleans, LA 286 3,422
Top 60 Assets 16,566 374,164
Other (90 Assets) 12,031 168,218
Total Portfolio 28,597 $542,382

Note: For the trailing twelve months ended March 31, 2019. Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. Amounts in thousands, except rooms. The information has not been audited and is presented only for comparison purposes.

RLJ Lodging Trust

Pro forma Operating Statistics

(unaudited)

For the three months ended March 31, 2019 and 2018

Top Markets   # of Hotels   Occupancy       ADR     RevPAR
2019     2018     Var 2019     2018     Var 2019 2018 Var
Northern California 12 81.1 % 79.1 % 2.5 % $ 252.51 $ 224.08 12.7 % $ 204.85     $ 177.30     15.5 %
Southern California 9 79.7 % 84.0 % (5.1 )% 173.17 172.02 0.7 % 138.06 144.47 (4.4 )%
South Florida 13 89.6 % 91.6 % (2.2 )% 219.65 224.98 (2.4 )% 196.77 206.18 (4.6 )%
Austin 14 79.9 % 76.6 % 4.3 % 173.99 178.24 (2.4 )% 139.02 136.58 1.8 %
New York City 5 81.7 % 83.6 % (2.2 )% 178.67 174.62 2.3 % 146.04 145.91 0.1 %
Washington, DC 7 72.5 % 76.7 % (5.5 )% 182.09 178.32 2.1 % 132.02 136.82 (3.5 )%
Denver 13 62.0 % 67.6 % (8.4 )% 126.45 129.22 (2.1 )% 78.35 87.41 (10.4 )%
Chicago 14 60.4 % 59.5 % 1.5 % 119.71 121.87 (1.8 )% 72.28 72.49 (0.3 )%
Houston 11 73.0 % 73.2 % (0.2 )% 142.36 144.90 (1.7 )% 103.96 106.06 (2.0 )%
Louisville 5 63.9 % 58.7 % 8.9 % 146.43 140.42 4.3 % 93.50 82.37 13.5 %
Other 47 73.0 % 73.1 % 0.0 % 162.10   159.15   1.9 % 118.39   116.29   1.8 %
Total 150 74.8 % 75.3 % (0.7 )% $ 175.32   $ 171.87   2.0 % $ 131.19   $ 129.51   1.3 %
 
Service Level # of Hotels Occupancy ADR RevPAR
2019 2018 Var 2019 2018 Var 2019 2018 Var
Focused-Service 102 72.9 % 74.1 % (1.6 )% $ 158.97 $ 156.87 1.3 % $ 115.84 $ 116.20 (0.3 )%
Compact Full-Service 45 78.6 % 79.0 % (0.5 )% 195.14 190.27 2.6 % 153.34 150.30 2.0 %
Full-Service 3 60.0 % 53.5 % 12.0 % 146.31   141.45   3.4 % 87.75   75.73   15.9 %
Total 150 74.8 % 75.3 % (0.7 )% $ 175.32   $ 171.87   2.0 % $ 131.19   $ 129.51   1.3 %
 
Chain Scale # of Hotels Occupancy ADR RevPAR
2019 2018 Var 2019 2018 Var 2019 2018 Var
Upper Upscale 37 75.6 % 75.4 % 0.2 % $ 196.77 $ 191.40 2.8 % $ 148.67 $ 144.35 3.0 %
Upscale 96 74.9 % 75.9 % (1.3 )% 162.96 160.73 1.4 % 122.02 121.99 0.0 %
Upper Midscale 15 72.0 % 71.4 % 0.9 % 150.51 150.98 (0.3 )% 108.40 107.78 0.6 %
Other 2 68.5 % 70.4 % (2.7 )% 246.72   229.53   7.5 % 169.06   161.63   4.6 %
Total 150 74.8 % 75.3 % (0.7 )% $ 175.32   $ 171.87   2.0 % $ 131.19   $ 129.51   1.3 %
 
Flags # of Hotels Occupancy ADR RevPAR
2019 2018 Var 2019 2018 Var 2019 2018 Var
Residence Inn 29 74.4 % 75.9 % (2.0 )% $ 152.39 $ 154.55 (1.4 )% $ 113.38 $ 117.36 (3.4 )%
Courtyard 24 73.9 % 74.6 % (0.9 )% 159.51 157.14 1.5 % 117.96 117.29 0.6 %
Embassy Suites 22 79.1 % 80.1 % (1.1 )% 195.38 191.20 2.2 % 154.64 153.09 1.0 %
Hyatt House 11 79.2 % 81.5 % (2.7 )% 182.87 173.64 5.3 % 144.91 141.47 2.4 %
Hilton Garden Inn 8 71.3 % 73.6 % (3.1 )% 167.22 162.10 3.2 % 119.23 119.31 (0.1 )%
SpringHill Suites 8 59.9 % 63.6 % (5.9 )% 126.70 125.60 0.9 % 75.86 79.92 (5.1 )%
Wyndham 8 76.2 % 74.2 % 2.7 % 159.65 160.66 (0.6 )% 121.66 119.25 2.0 %
Fairfield Inn & Suites 7 75.4 % 72.5 % 4.0 % 157.78 159.73 (1.2 )% 118.93 115.81 2.7 %
Hampton Inn 7 71.6 % 74.0 % (3.2 )% 144.88 144.10 0.5 % 103.73 106.59 (2.7 )%
Marriott 6 69.1 % 64.8 % 6.8 % 211.09 196.25 7.6 % 145.94 127.09 14.8 %
DoubleTree 4 88.6 % 89.2 % (0.7 )% 193.89 190.67 1.7 % 171.71 170.05 1.0 %
Renaissance 3 72.4 % 73.9 % (2.0 )% 171.80 173.76 (1.1 )% 124.45 128.40 (3.1 )%
Hyatt Place 3 70.6 % 75.4 % (6.4 )% 176.52 169.51 4.1 % 124.66 127.82 (2.5 )%
Homewood Suites 2 73.2 % 66.9 % 9.3 % 162.76 162.11 0.4 % 119.11 108.51 9.8 %
Hilton 2 60.7 % 64.4 % (5.7 )% 176.50 186.11 (5.2 )% 107.13 119.83 (10.6 )%
Hyatt 2 81.5 % 81.8 % (0.4 )% 230.02 200.37 14.8 % 187.43 163.86 14.4 %
Other 4 66.9 % 65.6 % 1.9 % 219.90   212.29   3.6 % 147.12   139.32   5.6 %
Total 150 74.8 % 75.3 % (0.7 )% $ 175.32   $ 171.87   2.0 % $ 131.19   $ 129.51   1.3 %

Note: Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. The information has not been audited and is presented only for comparison purposes.

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